A way out of the price war: Electrical wholesalers need to raise their corporate profile

15.03.2017 |
Trade press

Ledvance publishes an international advisor study for the lighting branch with recommendations for action for electrical wholesalers

LEDification, Smart Home, digitalization – these megatrends are about to drastically change the international lighting market. The associated challenges influence the demands of professional users and therefore also affect electrical wholesalers. In an international survey, the lighting company Ledvance has analyzed their situation using the example of the lighting sector. The key finding: in order to be successful in the continuing price war in the long term, wholesalers need a clear company profile that offers tangible value propositions to their customers, especially the electrical contractors.

The changes in the lighting market entail both difficult challenges as well as significant opportunities for electrical wholesalers. "Concerning branding, wholesalers have depended too long merely on the prominent manufacturers’ brands in their assortment. However, that's no longer sufficient due to the mass of new providers, increasing price pressure and the growing density of information in the digital era. The study shows that wholesalers should strengthen their visibility as a company to differentiate themselves from their competitors," explained Oliver Vogler, Vice President Strategy & Marketing at Ledvance and one of the authors of the study. For this reason, according to Vogler, they should selectively carve out the preferences of their specific customer groups, yield a clear added benefit particularly in the LED and Smart Home sectors and thereby escape the price war with LED products.

Further results from the international advisor study from Ledvance indicate that this way forward is highly promising. Asked about their top priorities when selecting an electrical wholesaler, 55 percent of electrical contractors said that trust in the company is the most important factor.

Electrical contractors vs. wholesalers – differentiated priorities

Simultaneously, the price itself is not the greatest concern for electrical wholesalers fighting to attract electrical contractors, their most important customers. On the contrary, 70 percent of those responsible specified their largest challenge until 2020 is offering the correct and most innovative product portfolio. Suitable pricing follows (61 %) and then the increasing competition from online traders (53 %).

This expectation only partly meets the preferences of the electrical contractors. It is clear that when selecting a wholesaler, the price alone is decisive for only a minority (25 %) of the queried electrical contractors. 68 percent on the other hand place a focus on good, trustworthy relations or a broad portfolio of innovative and consistently available products.

Differing expectations with digital channels

The study also unveils varying expectations concerning the possibilities of digital platforms. Wholesalers assume that when electrical contractors purchase online the simplicity of the order process (59 %) and the wide portfolio (47 %) rank first, but in

reality they prefer the possibility of comparing products (55 %).

In general, the authors advise wholesalers to gain a detailed impression of their variety of own customers and to directly communicate with these via active company positioning and a succinct value proposition and delivery.

Price is not the largest concern for electrical wholesalers, but offering their customers the correct and most innovative product portfolio. Source: Ledvance
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When selecting their wholesaler the price is decisive for only a quarter of electrical contractors queried. The majority of these place value on trustworthy relations and a wide assortment of innovative and available products. Source: Ledvance
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About the "Electrical Wholesaler Study 2016"

A focus of the international advisor study is the electrical wholesaler group that until now was not thoroughly investigated but is economically exceedingly important for the lighting branch. To more closely illuminate their situation and expectations in the conflict area between technological transformation, pressure of innovation and price war, the company Ledvance – the former Osram lamp division – queried 140 leading managers from global wholesalers as well as 3,600 electrical installers from Germany, USA, Great Britain, Italy, Turkey and Brazil. This was carried out with customized surveys from May to June 2016, partly online and partly during company workshops. Download the study at www.ews2016.com.

ABOUT LEDVANCE

With almost 9,000 employees and active in more than 120 countries, LEDVANCE is one of the world's leading general lighting providers for professional users and retail customers. Emerged from the general lighting business of OSRAM GmbH, the company offers advanced LED lamps, standardized LED luminaires, intelligent, networked Smart Home and Building solutions, and traditional light sources. Since 2017, LEDVANCE is owned by a consortium led by the strategic investor IDG Capital and including the leading Chinese lighting company MLS and the financial investor Yiwu. In the 2016 fiscal year, LEDVANCE achieved a turnover of around 1.9 billion Euro. Based on an agreement with OSRAM, LEDVANCE will continue to use the trusted OSRAM and SYLVANIA (for USA and Canada) brands for its products.